How to trade spot Bitcoin ETF: Lessons learned from gold ETFs – Florian Grummes
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(Kitco News) Markets are often counterintuitive, and there could be a few surprises in store if a spot Bitcoin ETF is finally approved, said Florian Grummes, Managing Director at Midas Touch Consulting.
For crypto investors wanting to play a spot Bitcoin ETF approval, there are critical lessons to be learned from when gold-backed ETFs were introduced nearly 20 years ago, Grummes told Michelle Makori, Lead Anchor and Editor-in-Chief at Kitco News.
“Remember that the gold ETFs [did] not only bring glory and happiness to the gold market,” Grummes said. “They changed some things quite significantly, and something similar could happen with the Bitcoin ETF down the road.”
To learn more about the impact of gold-backed ETFs on the market, watch the video above.
Investors can anticipate a lot of institutional and retail buying coming into the crypto market if the U.S. Securities and Exchange Commission (SEC) approves a spot Bitcoin ETF. But it will likely be buy the rumor, sell the fact scenario.
“The market pricing in that potential over a period of time. And once it’s finally out, it’s time to take profits,” Grummes explained. “You would think it’s great news coming to the market, but it is selling off because everybody has already positioned themselves [for the event].”
Digital asset investment products saw a third consecutive week of inflows last week on reports of spot Bitcoin ETF filings. According to data provided by CoinShares, $136.1 million flowed into the various investment products tracked by the firm, bringing the total over the past three weeks to $470 million.
Multiple spot Bitcoin ETFs were also refiled with the SEC in the last two weeks, naming Coinbase as the partner for the surveillance-sharing agreement (SSA).
Grummes warned that Bitcoin investors would be giving up something essential with the introduction of a spot ETF. “Personally, I’m not a fan of ETFs at all. I understand that for retail investors, it’s an easy way to invest,” he said. “I prefer direct ownership of stocks. I also want to directly receive the dividends and have the right to vote. All these things you give up with the ETF structure.”
Bitcoin to hit $100k next year?
There are two major events on the horizon for Bitcoin – a spot Bitcoin ETF and the next halving. Once a reality, Bitcoin price can reach $100,000 in 2024, Grummes pointed out.
“The halving … together with the potentially approved Bitcoin ETF, it would definitely drastically change everything. And then $100,000 in the next year is very likely,” he said.
For more details on the BlackRock spot Bitcoin ETF filing and potential surprises down the road, watch the video above.
The next Bitcoin halving is scheduled for April 2024, which is when the Bitcoin block reward will drop from 6.25 Bitcoin per block to 3.125 Bitcoin per block.
“Once the halving is done … we should be in a new bull market,” Grummes said. “All it takes is for Bitcoin to break out above the $65,000 to $69,000 resistance zone, and then [$100,000] can eventually happen rather quickly.”
For technical charts and analysis of where the Bitcoin price could head next, watch the video above.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
